BlueScope's earnings to be cut in half by coronavirus

BlueScope - owner of the Port Kembla steelworks - is expecting to take a massive hit to its bottom line due to Coronavirus. Picture: Anna Warr
BlueScope - owner of the Port Kembla steelworks - is expecting to take a massive hit to its bottom line due to Coronavirus. Picture: Anna Warr

BlueScope is expecting its yearly earnings to be more than halved in the wake of the COVID-19 situation - hitting their lowest levels in four years.

And there is concern about what the next 12 months will do to the bottom line.

Chief executive Mark Vassella told investors the steelmaker was expecting its pre-tax earnings for 2019-20 to be around $560 million.

That's a 58 per cent drop on last year's $1.35 billion figure and the lowest in four years.

In 2016, the company brought in $353.8 million coming out of the steel crisis, following that up with $719 million a year later.

Much of the damage can be attributed to COVID-19, which saw a shutdown of its operations in Malaysia and New Zealand, and the closure of a number of offices in China.

The company's US operations also had to deal with carmakers in that country calling a halt to their operations earlier this year.

The official report on earnings are expected to be released on August 17 and while the expected earnings have fallen sharply, Mr Vassella said it showed the "strength of our business model" to remain in the black.

"The results show a strong performance in the face of challenging conditions caused primarily by the COVID-19 pandemic," Mr Vassella said.

"They clearly demonstrate an outstanding operational and commercial effort by our 14,000 people across all 18 countries."

The Port Kembla steelworks is part of the company's Australian Steel Division, which Mr Vassella said saw orders remain stable.

However, Mr Vassella said there was concern about what the coming year would bring.

"There is currently a high level of uncertainty in BlueScope's key markets at the start of FY2021 due to the pandemic and weaker steel spreads," Mr Vassella said.

The chief executive also flagged a "strategic review" of the company's New Zealand operations.


This story BlueScope's earnings to be cut in half by COVID-19 first appeared on Illawarra Mercury.